In this post, we take a look at UPS and the success behind their route optimization software.
Plus, you’ll get a chance to see how you can leverage route planning and optimization to improve your delivery, like UPS.
But more on that later.
Right now, the focus is all on UPS.
So, let’s get started.
United Parcel Service (UPS) is a global powerhouse in last-mile delivery and logistics.
With more than a century of experience, the company today strives to evolve its culture of constructive dissatisfaction.
And behind that culture is UPS’ route optimization software.
Built on advanced route optimization algorithms, it’s saving UPS large amounts of money while making the job easier for its workers.
With many benefits to the environment, as well.
After more than a decade in development, the company has perfected a solution for what it believes is the biggest problem in modern delivery - route optimization and route planning.
According to Juan Perez (UPS Chief Information and Engineering Officer):
UPS drivers make an average of 125 stops each day.
That’s a far cry from on-foot and bicycle delivery of packages 100 years ago.
Second, UPS drivers make deliveries to a lot of places, as well.
Sometimes, these locations aren’t easily accessible or visible from the main roads, which makes it hard to reach these places using traditional mapping software.
Now, consider that UPS is a multinational company.
It handles entire shipments, deliveries, and distribution networks outside of the United States.
In more than 220 countries and territories in which it operates.
With more than 20 million global packages delivered daily.
And the company employs more than 100,000 drivers, as well.
That would be impossible to do with manual planning or legacy tools.
So, to optimize multi-stop route planning for all these tasks, UPS had to develop its route planning software.
Their solution is ORION - On-Road Integrated Optimization and Navigation.
More than a decade in the making, Orion is a route planning app that uses a complex algorithm to optimize multi-drop route planning.
Here’s a short video about UPS Orion.
But before all of this had happened, there were years of continued investment and research.
The first significant implementation of the software came in 2013.
At the time, the company applied it to only 10,000 UPS routes.
But Orion’s performance turned out to be better than expected.
So, UPS had to speed up the scale of its US deployment, and the full launch came in 2016.
The company regularly rolls out new updates and improvements, but the system hasn’t changed much since then.
All this came at a price.
UPS invested an estimated $1 billion per year into the project, making Orion one of the World’s largest projects of this kind.
One of the key moves by UPS in developing the app was installing GPS devices and vehicle sensors in its vehicles in 2008.
By tracking GPS locations, UPS gathered large amounts of data like vehicle routes and vehicles idle times.
In the end, all this data resulted in more than 1000 pages of code in the algorithm used by Orion.
Orion uses countless amounts of data to help UPS drivers find the optimal way to deliver and pick-up packages.
Orion calculates routes based on:
Not only does it calculate the shortest distance between two locations, it also takes into account factors like fuel consumption and traffic.
It also uses an online map specifically customized by UPS to help its professionals in planning routes.
During delivery, Orion can solve any alteration within the planned route in a matter of seconds.
Orion is an online route optimization software.
And while it is accessed via any device across UPS’ thousands of hubs, the physical servers are located in Mahwah, New Jersey.
All the data that drivers collect arrives here. It is then processed, and added to the system to improve the software, thanks to Artificial Intelligence (AI).
Another part of UPS’ route optimization software is the drivers’ Delivery Information Acquisition Device (DIAD).
DIAD is a handheld tool that drivers usually mount on the dashboard of their vehicles that allows hands-free use of Orion.
It was first introduced in 1991, and UPS is currently using the fifth generation of DIAD (with the sixth one in development).
The company also relies on UPSNav - the latest Orion update.
UPSNav optimizes route delivery for drivers by providing precise details about locations, even when it comes to the point of entry at the pick-up and drop-off sites.
What is the shortest possible route between multiple points which you can reach before returning to the starting point?
This question is the basis of the Traveling Salesman Problem (TSP).
First formulated in the early 20th century, the Travelling Salesman Problem is crucial not only in logistics but in numerous other fields such as computer sciences, operations research and, to some degree, even in DNA sequencing.
When applying it to two stops, the problem is pretty straight-forward.
But with more than 100 stops per day that UPS drivers make, the possibilities are endless. And the problem, a Gordian knot.
For example, with 10 locations there can be around 300,000 combinations. Increase the number of destinations to 15, and you get more than 87 billion permutations.
Because of this, it isn’t hard to realize that optimizing routes for any large number of stops is close to humanly impossible.
But that’s where advanced algorithms, coding, and AI come into play to form route optimization apps.
Just as dividing two three-digit numbers takes our brains at least a couple of seconds, it’s almost instantaneous for a basic calculator.
A similar thing happens with route planning optimization.
But as we mentioned earlier, a critical part of the whole problem-solving is the input of the correct data.
Orion can give UPS drivers an optimal route in a matter of seconds thanks to years of quality data input into an algorithm that Orion and UPSNav use.
Orion lets you update or correct its online maps in real-time if delivery or pick-up points change during live operations.
That is essential for perfecting how route planners work.
On the other hand, AI steps in to utilize all of this data to find the best possible path for a driver to make his drop-offs/pick-ups.
Of course, before Orion, and before AI, drivers or other workers planned routes by themselves.
But solving the TSP with the amount of deliveries UPS does daily in an efficient manner is virtually an impossible task for drivers.
Not only that, it would be time-consuming as well.
By using Orion, UPS enables their drivers to focus on driving and delivery, without the additional distraction of planning delivery routes.
Modern vehicles have AI systems that use complicated algorithms to improve driver safety beyond human capabilities.
Our phones have apps that help us with tedious, everyday tasks, and make them easy to do.
So, it stands to reason that we should use software and apps to make delivery route optimization easier, as well.
That’s why UPS had invested billions of dollars to develop Orion.
Seeing the results, it’s safe to say that it was money well spent.
But route optimization software is now available to all companies, regardless of their shape, size, or industry.
Now, every business can profit and improve its delivery just like UPS.
And to know what results you can expect, here are the main benefits of route optimization apps and how you can get a quick return like UPS:
The Oxford Dictionary describes optimization as:
The action of making the best or most effective use of a situation or resource.
So it’s quite obvious that one of the main benefits of using a route optimization app is a better use of your resources.
By using Orion, UPS is first and foremost saving time. And we all know that saving time is saving money.
Their drivers have clearly defined and exact routes from point A to point B, as well as detailed turn-by-turn instructions on how to get there.
That ensures all they have to do is focus on driving to the next drop-off or pick-up point.
By organizing multiple destinations into the best possible route, Orion makes life easier for everyone involved – drivers, operators, route planners, but customers as well.
Consider how the speed of delivery means customers wait less for their order to arrive.
With faster delivery, customers are bound to spend more and order more products.
That raises the income of any business that leverages the power of route optimization software.
Better route optimization means shorter distances vehicles have to travel, which means less fuel consumption.
UPS says Orion is saving them about 100 million miles per year. That’s around 10 million gallons of fuel.
The average price for a gallon of fuel in the US is around $2.5.
So, the math here is pretty clear.
Likewise, UPS has a Don’t turn left policy, which was introduced back in the 1970s.
The idea is that the vehicles should avoid going against the flow of traffic and avoid making left turns.
When turning left, the vehicle has to wait for cross-traffic to pass, which wastes both time and fuel.
Orion route optimization takes this into account, as well.
It creates paths with more right turns, which makes each route even more fuel-efficient and cost-effective.
UPS estimates it saves them additional 10 million gallons a year.
Lastly, reducing fuel consumption also means fewer carbon emissions.
UPS estimates that’s around 100,000 metric tons of CO2 a year, so it’s an added benefit for the environment.
Whether your company has a couple of vans or 125,000 as UPS, it’s in your best interest to make your vehicles remain operational as long as possible.
Fleet route optimization means fewer miles travelled.
That translates to extended use of each vehicle, and less wear and tear. And that makes each vehicle in your fleet more reliable.
But every vehicle needs regular service and maintenance, as well. And that’s another cost you have to take into account.
However, decreasing the miles travelled also minimizes the chance of malfunction, and reduces the need for constant repairs.
Be it a flat tire or something more serious, like a breakdown.
All in all, UPS estimates that Orion saves them $400 million per year on vehicle maintenance alone.
Because of route planning software, UPS drivers focus more on driving and deliveries.
As we mentioned before, they make more than 100 stops per day. That’s a lot of responsibility as is.
Having to worry about traffic or which way to go at the next intersection would make their day a lot more complicated.
Less experienced drivers benefit the most, here.
Whenever drivers start a new delivery route, having an app that tells them where and when to turn to reach a customer’s address makes their job a whole lot easier.
Any business move you take has to serve and satisfy your customers.
Route optimization software makes deliveries and pick-ups more organized. But it also makes your customers happier.
A route planning app that can navigate a driver through alternative roads to a drop-off site but also provide customers with precise ETA updates in real-time, is a win-win situation.
That makes it easier for customers to plan their day around other responsibilities, rather than the delivery itself.
In return, it reduces the need for extra communication between your customer support teams and customers.
And that lowers the frustration of everyone involved.
It’s safe to assume that any route planning software has to have multi-stop route planning capabilities.
But it has to have it well-developed and advanced, as well.
For example, Google Maps has a multi-stop route planning feature.
But it’s pretty basic when compared to Orion. And the number of stops is limited.
Control over fuel consumption is paramount, as well.
It’s one of the most consistent costs of running a delivery, as well as an essential one.
You can’t afford to leave out the exact and precise numbers when calculating key metrics in delivery logistics, such as fuel consumption.
Having a fleet of vehicles adds another factor.
Be it an internal vs external fleet, you have to have an app that can organize drivers without overlaps in their schedules or delivery areas.
And all of this needs to happen in an optimal amount of time.
If you have an app that calculates routes in tens of minutes, rather than seconds, you can find yourself in trouble when you have to make swift decisions.
If one of your vehicles breaks down, for example, you have to reassign other drivers to that route or drop-off to make up for the loss.
So having an app that can do this quickly is also essential for building an agile delivery operation.
But not all companies are UPS.
Nor do they have the resources of UPS.
Nor are they global leaders in the delivery logistics.
Fortunately for you, there are other apps out there that can get the job done extremely well and at a much lower cost.
eLogii is one such solution.
We have everything you need to start improving your delivery.
Here are the nine free guides that will show you exactly what we do to optimize the last mile and dominate delivery logistics.
1. The definitive and complete guide to Route Optimization Software
2. Why mapping multiple delivery stops is impossible without software
3. How to leverage Route Planning Software to drive delivery excellence
4. What is Delivery Management Software?
5. How we crush customer experience with delivery management software
6. Where to find and how to choose delivery management software
7. Delivery Management Platforms
8. How we dominate reverse logistics and eCommerce returns
9. How teams dominate remote work using nothing but Field Service Software
eLogii is an end-to-end cloud-based delivery management platform. Our powerful solution solves the biggest challenges of modern distribution and field service businesses, including: route optimization, planning and execution.
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